Corporate Governance and Development: An Update

2012, Focus 10, Global Corporate Governance Network, IFC.

108 Pages Posted: 20 May 2012 Last revised: 21 Feb 2015

See all articles by Stijn Claessens

Stijn Claessens

Bank for International Settlements (BIS)

B. Burcin Yurtoglu

WHU - Otto Beisheim School of Management

Date Written: May 17, 2012

Abstract

This paper reviews the relationships between corporate governance and economic development and well-being. It finds that better-governed corporate frameworks benefit firms through greater access to financing, lower cost of capital, better firm performance, and more favorable treatment of all stakeholders. Numerous studies agree that these channels operate not only at the firm level, but also in sectors and countries - with corporate governance being the cause. There is also evidence that when a country’s overall corporate governance and property rights systems are weak, voluntary and market corporate governance mechanisms have more limited effectiveness. Importantly, the dynamic aspects of corporate governance - that is, how corporate governance regimes change over time and what the impacts of these changes are - are receiving more attention. Less evidence is available on the direct links between corporate governance and social outcomes, including poverty and environmental performance. There are also some specific corporate governance issues in various regions and countries that have not yet been analyzed in detail. In particular, the special corporate governance issues of banks, family-owned firms, and state-owned firms are not well understood; neither are the nature and determinants of public and private enforcement. Consequently, this paper concludes by identifying major policy and research issues that require further study.

Suggested Citation

Claessens, Stijn and Yurtoglu, B. Burcin, Corporate Governance and Development: An Update (May 17, 2012). 2012, Focus 10, Global Corporate Governance Network, IFC.. Available at SSRN: https://ssrn.com/abstract=2061562

Stijn Claessens

Bank for International Settlements (BIS) ( email )

Centralbahnplatz 2
CH-4002 Basel
Switzerland

B. Burcin Yurtoglu (Contact Author)

WHU - Otto Beisheim School of Management ( email )

Chair of Corporate Finance
Burgplatz 2
Vallendar, 56179
Germany
+49 261 6509-721 (Phone)
+49 261 6509-729 (Fax)

HOME PAGE: http://www.whu.edu/forschung/fakultaet/finance-group/corporate-finance/

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